Building convention centers is no easy task

2011-05-12T00:00:00Z 2011-05-12T23:50:08Z Building convention centers is no easy taskBy Keith Benman keith.benman@nwi.com, (219) 933-3326 nwitimes.com

Rome wasn't built in a day, and neither are multimillion-dollar municipal convention centers that can inject millions of dollars in visitor spending into local restaurants, hotels and businesses.

Leaders in communities that have undertaken the building or expansion of convention centers in recent years say the effort takes political will, a supportive business community and some form of tax support.

The village of Tinley Park created a tax increment financing district for a plot of swampy land off Interstate 80 in 1994, but it wasn't until the next decade that it could put together the deal to begin work on a convention center, Mayor Ed Zabrocki said.

"We finally put it all together and decided to jump off the cliff together," Zabrocki said of the Village Board's decision to build the $9 million convention center that opened its doors in 2002.

Now, work is almost complete on a new $19 million expansion of the convention center, which already has bookings into next year.

Convention center proponents in places as different as Schaumburg, Ill., and Fort Wayne, Ind., tell stories similar to Tinley Park's when describing how they built convention centers that today are mainstays of their local economies.

Projects like those will get close scrutiny in Northwest Indiana in the coming months and years, as the South Shore Convention & Visitors Authority begins an all-out push to convince community leaders Northwest Indiana needs its own first-class space for hosting conventions and sporting events.

What may be needed

Determining the specifics of what kind of facility the region needs will require a feasibility study, said South Shore Convention & Visitors Authority CEO Speros Batistatos. His thoughts are a facility with between 75,000 and 100,000 square feet of usable convention space costing anywhere from $55 million to $70 million.

The facility should have all the latest technology and be able to go from hosting a trade show one day to a basketball tournament the next, Batistatos said.

Batistatos maintains that Gary's Genesis Convention Center does not have the appropriate space or amenities for hosting most conventions today. The Radisson Hotel in Merrillville has significant ballroom space and is able to host conferences of all sizes, but it does not have the kind of open floor space needed for large trade shows and other convention center events, he said.

The South Shore Convention & Visitors Authority favors using a food-and-beverage tax to finance the building of the convention center and for any subsidy needed for operations, and estimates a tax between 1 percent and 1 1/2 percent would be required.

However, Batistatos said all that is getting ahead of the game, with the authority now simply pitching the need for such a facility as some of the region's traditional tourism business segments dry up.

"It's not ours to say this is how it's done," Batistatos said. "It's ours to say we have a need. We are in trouble."

Not everyone on board

Tourism chiefs in Porter and LaPorte counties are questioning the motives of Batistatos and the authority he leads in pushing for a convention center.

"If there is a need here, why don't we want this to be done privately?" said Jack Arnett, executive director of the LaPorte County Convention & Visitors Bureau. "And why hasn't it already been done?"

He accuses Batistatos of linking the funding plan for the convention center to the Lake County tourism chief's longtime goal of merging his authority with the LaPorte County and Porter County tourism bureaus.

"He's saying this should be funded based on a hostile takeover of LaPorte County and Porter County and the food-and-beverage tax," Arnett said.

Batistatos said in pitching the idea to local organizations he is in no way linking the merger of the three bureaus with the building of a convention center.

"They are our two largest policy goals: to merge the bureaus and to build a convention center; but they are in no way dependent on one another," Batistatos said.

He said the South Shore Convention & Visitors Authority is advocating a food-and-beverage tax for Lake County only. He said it would be a misinformation campaign if anyone wants to make people believe such a tax also would be imposed in LaPorte County and Porter County.

"Our position has never deviated," Batistatos said. "For 17 years we advocated a food-and-beverage tax to build a sports facility or a convention center."

Indiana Dunes Tourism, the tourism bureau for Porter County, currently is focused on the possibility of redeveloping the Porter County Exposition Center, bureau Executive Director Lorelei Weimer said. It recently issued a request for qualifications for consultants in order to learn how much a feasibility study would cost.

"You want to do your homework first," Weimer said. "Once the feasibility study is done you have the conversation."

She said the need for a feasibility study also applies to the convention center proposed by the South Shore Convention & Visitors Authority or any other for that matter.

Success in other communities

Communities that have built or expanded convention centers in recent years say there is no doubt those facilities provide huge benefits to the surrounding community and its economy.

The 2005 expansion of Fort Wayne's downtown Grand Wayne Convention Center became the linchpin for a downtown development project that includes a minor league baseball stadium, a 900-space parking garage and a 250-room Courtyard by Marriot, said Visit Fort Wayne CEO Daniel O'Connell.

Three-quarters of a 7 percent hotel tax has paid for the convention center and its improvements, with the price tag of the expansion alone coming in at about $30 million. A tax increment financing district established for the area has paid for the infrastructure improvements needed.

"Every time we built a bigger or better building it was because demand was there," O'Connell said. "We had business on the books that in order to keep here we needed to grow."

Convention center projects often face opposition from residents concerned about higher taxes, O'Connell said. The hotel tax, which mainly is a tax on out-of-towners, and the tax increment district financing are two ways of avoiding any property tax increase.

In Illinois, the $228 million Renaissance Schaumburg Hotel and Convention Center opened five years ago. Like other communities, Schaumburg has used tourism and entertainment taxes that mainly fall on out-of towners to pay for it, Village Manager Ken Fritz said.

To pay off bonds issued for the building the convention center, the village increased its hotel tax by 2 percent, slapped a 5 percent tax on all entertainment tickets and added a 2 percent communications tax increase. A slice of convention center revenue also pays off those bonds.

"A government-owned convention center, it's difficult, it's a very hard concept for people to understand because they will look for the village to make a profit on it," Fritz said. "You have to explain the village can't capture the profit directly, but the community can capture the profit directly."

The convention center and attached 474-room Renaissance Hotel produce an overall economic benefit for Schaumburg of more than $40 million per year, according to a recent study by the Schaumburg Center for Economic Development. About $15 million of that is direct benefit realized by hotel and convention center employees and others. The remainder is money spent by convention attendees as they venture outside the center.

"It's one big reason we have 203 restaurants in Schaumburg and why we are such a phenomenal retail destination," said Jim Feltman, vice president of development for the center.

Plans for the project began 20 years ago, with a promise of support from the state, Fritz said. But that plan fell through. Yet building a convention center remained a goal of the village and business community. In 1999, Mayor Al Larson moved to secure some of the village's last open space and 45 acres were bought for $13 million.

A supportive business community, including the Schaumburg Business Association, went all out to get the convention center built.

"A project like that always takes a lot of political courage," Fritz said.

How to pay for it

The South Shore Convention & Visitors Authority also believes taxing its own industry is the way to pay for a convention center in Northwest Indiana, Batistatos said.

A food-and-beverage tax would raise $7 million to $10.5 million per year, which is enough to get the convention center project done, Batistatos said.

The return on that investment comes from the money out-of-towners spend, Batistatos said. A 2002 tourism study by Ball State University found a 1 percent increase in hotel occupancy in a region generates $900,000 in overall economic output.

"Everyone understands if they build it they will come," Batistatos said. "But they are not spending their money in the facility. They are spending it at the hotel, at the restaurant, at the casino and at the shopping center."

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